Kentucky employs omnibus branch budget bills or general appropriation
bills in its process.

A separate branch budget bill is enacted for each branch -- legislative,
executive and judicial -- and includes operating and capital
appropriations and related fiscal provisions for all agencies and budget
units in the respective branch.

The Commonwealth's budget is the complete financial plan for the
expenditure of public funds in each fiscal year of a biennium, as
contained in the branch budget bills.

Branch budget bills, unlike other acts, become law when approved by the
Governor or, if vetoed, when finally acted upon by the General Assembly.

An appropriation means the authority to spend a maximum sum of public
funds for a particular purpose.

A budget bill is law which is effective for the duration of a biennium.

Budget bills are printed in the Acts of the General Assembly for each
session.

Budget acts are published in KRS Chapter 47.

Provisions of a budget bill may modify or suspend, for the duration of a
biennium, any statute which is germane to the broad subject of state
government finance.

The Constitution requires the legislature to enact a budget that
balances spending within available resources by each budget fund or
account. While the Constitution permits the state to incur a casual or
unplanned deficit, tradition and state law prohibit a deficit in
operations.

The budget bill is organized into two appropriations sections -- the
Operating Budget and the Capital Budget -- and additional parts which
concern fiscal administration and policy.

The standard unit for appropriation in the budget bill is a department
or agency;

Sometimes a division, program, or consolidated organizational units
within a department or cabinet may constitute an appropriation unit in
the Operating Budget.

Appropriations may not be transferred from one appropriation unit to
another unit unless authorized by the budget bill, by charges for
services, by statute, or by provisions of a temporary reorganization
order.

Expenditures must be based upon an appropriation enacted by the General
Assembly.

Capital project or debt service appropriations may not be used for
another purpose.

Operating Budget

The Budget Fund classification in the Operating Budget consists of the General Fund, the Road Fund, federal funds accounts and restricted funds accounts.

The General Fund - consists of state tax revenue collected under
general tax laws and other designated receipts available for the
activities, operations and services of state government.

The Road Fund - consists of money from excise or license taxation
relating to gasoline or other motor fuel products, and moneys derived
from fees, excise or license taxes relating to registration, operation
or use of vehicles on public highways. The Constitution dedicates these
revenues for highways and bridges, vehicle regulation and related state
administrative purposes.

Federal Funds - moneys received by state agencies in the form of
grants, contracts or other assistance from the federal government for
specified purposes.

Restricted Funds - moneys collected by state agencies which are
restricted by statute or budget bill for expenditure toward general or
specific use by an agency. Restricted sources include regulatory or
occupational licenses and fees, tuition, service charges, sales of goods
or products, donations or grants from non-state sources and expendable
receipts and earnings of trust type programs.

These fund sources, and proceeds from highway bond issues when authorized by the General Assembly, comprise the total operating budget of the Commonwealth.

Capital Budget projects are defined as acquisition or construction of a
building, structure, property or utility estimated to cost $400,000 or
more, acquisition of a major item of equipment or systems estimated to
cost $100,000 or more, leased space costing more than $200,000,
information technology systems costing $400,000 or more, and state use
allowance payments of $200,000 or more for local court facilities.

State budget law requires any project meeting these definitions to be
authorized by line-item in a budget bill or other enabling act before
public funds may be spent.

Any bond project which is supported by state-appropriated debt service
must be authorized by the General Assembly before bonds may be issued.
The annual debt service and related fund source must be specified in the
Operating Budget.

In addition to the standard funds for the Operating Budget, other
capital funds include moneys earned by assets, allocated receipts, and
other project resources provided by off-budget entities and local
jurisdictions.

Budget Information Reporting

Budget information about services/activities and funding is organized
and reported in budget documents at the budget unit level and summarized
by major budget function or cabinet.

Appropriation information in a branch budget act is organized at the
agency, its consolidated budget units or significant program level, and
summarized by major budget functions for state government.

grants and other financial assistance to persons, other
jurisdictions and organizations;

debt service for retirement of bond principal, interest and related
costs; and

capital outlay for equipment items and capital projects which do not
exceed the Capital Budget threshold.

The budget law requires that debt service appropriations not be used for
any other purpose; excess General Fund and Road Fund supported debt
service appropriations due to project cancellation and bond issue
requirements lapse to the surplus account of the respective Fund.